Oil prices supported by North Sea outage
Oil prices briefly fell slightly in trading on Wednesday after a report from the United States Energy Information Administration showed a surprise increase in US crude inventories.
According to the EIA’s weekly report, US crude stocks rose by 1.6 million barrels. Analysts had been expecting a drop of 435,000 barrels.
The EIA report cast a shadow over a report issued on Tuesday by the American Petroleum Institute that said inventories fell by 1.8 million barrels last week.
“The crude build caught the market leaning the wrong way. Crude exports dropped to 575,000 b/d this week, versus over 1 million b/d last week,” David Thompson, executive vice-president at Powerhouse told Reuters.
“The selling most likely includes a fair number of sell stops being hit.”
Brent crude was up 31 cents to $54.48 by 12:31 p.m., EDT while US crude rose by 23 cents to $51.26.
“Yesterday’s API report gave the market a bullish head-fake via three chunky draws, hence a build to crude stocks and minor draws to the products is causing a tempering of bullish optimism,” said Matt Smith, director of commodity research at ClipperData.
Oil prices were supported by an outage at the 180,000 b/d Buzzard field in the North Sea.
JBC Energy is optimistic that even if the OPEC supply cut deal is not extended, the global crude glut will lessen in the coming months.
“In the event of OPEC/non-OPEC not extending the cuts into the second half, the world would still continue to draw stocks at a mild pace of about 200,000 bpd until September, thereby lending support to prices one way or another,” JBC told Reuters.
The analyst added, a continued rise in US shale output will put pressure on prices.
